Jobless Rate Edges Up to 7.1%, but Number of Employed Hits Record

The nation’s total unemployment rate edged up slightly to 7.1% in December while at the same time the total number of Americans holding jobs rose to a record 107.9 million, the Labor Department reported Wednesday.

Presenting the monthly statistics to Congress, Director Janet L. Norwood of the Bureau of Labor Statistics stressed the positive, noting that 340,000 new jobs were created in December, including strong gains in manufacturing employment for the first time in several months.

Norwood also emphasized the steady growth in employment that has occurred since the recession ended in 1982. “More than 7 million jobs,” she noted, later remarking: “That’s pretty strong.”

Growth in Work Force But because the number of Americans looking for work shot up by 390,000 after several months of virtually no increases in the labor force, the ranks of the unemployed also increased 49,000, to 8.2 million, the Labor Department said.

Civilian unemployment, which excludes members of the armed forces on duty in the United States, stood at 7.2% last month, only slightly higher than the revised 7.1% rate for November that also was announced Wednesday. Total unemployment for November, meanwhile, was 7%.

President Reagan, at his news conference Wednesday night, was quick to claim credit for the expansion in employment during the month.

“Even though you all had to report that there was a fraction of an increase in the unemployment rate, December over November,” Reagan told reporters at the press conference, “I’d like to point out--and statisticians always do puzzle me--there were 340,000 more people employed in the United States in December than were employed in November. But evidently there were more new entrants to the job market.”

Sen. William Proxmire (D-Wis.), a member of Congress’ Joint Economic Committee, sought out the dark side of the day’s numbers and stressed the statistical increase in unemployment.

But private economists tended to agree with Norwood’s rosier interpretation, seeing a harbinger of continued growth in last month’s addition of 85,000 manufacturing jobs--25,000 in the auto industry alone--and in the continued expansion of total employment by well over 300,000 a month.

“Aside from an uptick in unemployment, largely due to a large increase in the labor force that was very unusual for December, the report was extremely strong,” Allen E. Sinai of Shearson Lehman/American Express said. “The rise in manufacturing employment indicates we should have a good rise in industrial production in December. All the data in the report should defuse any lingering fears that we could have a recession in the near term.”

Similarly, Robert T. Parry, chief economist at Security Pacific National Bank in Los Angeles, said: “I think the real significance is the employment numbers. The real message is that employment is strong.”

Donald Ratajczak, director of the economic forecasting project at Georgia State University, observed: “Those were very good numbers in manufacturing. A lot of it was auto-related, but there was also reasonably good growth in almost all sectors. Two-thirds of all industries increased hiring--that is a very good number, a good, solid performance.”

The manufacturing sector “is ready to hire,” Ratajczak added. “I see the next several months showing decent hiring activity.”

Unseasonably warm weather in December in most of the nation produced an increase in construction jobs, Norwood noted, while seasonal plant closings in manufacturing were fewer than usual.

Even with those gains, however, two-thirds of the expansion in jobs since the recession has been in services, now clearly dominant in the changing American economy.

By contrast, in the goods-producing sector, Norwood noted, “very few industries had added more than the number of jobs lost during the recession.” Indeed, some long-depressed industries--mining, steel, coal, petroleum, tobacco and leather goods--”had employment levels in December that were lower than at the recession low in November, 1982,” she said.

Another anomalous fact reported Wednesday was that the number of “discouraged workers”--those who have stopped looking for work--has not been declining as it should at this stage in an otherwise vigorous economic recovery.

After reaching a high of 1.8 million during the worst of the recession, the number of discouraged workers hovered around 1.2 million throughout 1984--and may even have increased slightly during the last three months of the year, the Labor Department said.

Discouraged workers are disproportionately black, poor and unskilled, and the high unemployment rate for blacks remained virtually unchanged at 15%. Unemployment among whites (6.2%), Latinos (10.2%) and teen-agers (18.8%) also remained at or near the levels of recent months.